U.S. troops backed by an airstrike killed seven Iraqis, including three women, during a raid Friday targeting al Qaeda in Iraq, the military said.
Iraqi officials and witnesses gave a conflicting account, saying those killed were civilians from a poor family that had been displaced from Baghdad during sectarian violence.
The U.S. troops were acting on tips that a man believed to be the leader of a bombing network was in Adwar, a Sunni town 70 miles north of Baghdad.
Ground forces surrounded a house and called for those inside to surrender but opened fire after an armed man appeared in the doorway, killing the main suspect, the military said.
A U.S. airstrike was then called in, killing three other suspected insurgents and three women, the military said, adding that an Iraqi child was pulled from the rubble and taken to a U.S. base for medical treatment.
The airstrike destroyed the house. Associated Press photos showed children picking through a huge pile of rubble and relatives holding vigil over the blanket-covered bodies of at least four of those killed.
U.S. airstrikes and conflicting claims about whether civilians have been killed have been common throughout more than five years of war as the Americans seek to minimize civilian casualties on the ground. But Friday's raid was the deadliest in weeks amid a relative calm due to recent security gains.
Local Iraqi officials insisted that those killed had no connection to the insurgency.
Tribal chief Sheik Faris al-Fadaam said the family moved from Baghdad more than two years ago after the head of the household, Hassan Ali, was killed because he was a Sunni policeman.
"The family was very poor," al-Fadaam said. "The family came here and we helped them to rent that house. It was an extended family. They did not have any political affiliations. They did not engage in any hostile activity or have any connection with gunmen."
The U.S. troops surrounded the house at about 2 a.m. and used loudspeakers to order occupants to evacuate, according to police and witnesses.
Two men and a woman went outside but were killed by gunfire near the gate, the police and witnesses said. Five others were killed when a helicopter fired on the house, they said.
Eight bodies were taken to the general hospital in nearby Tikrit, according to police and hospital officials.
A local police officer, Capt. Mohammed al-Douri, said the eight killed included five men and three women.
He said one of the dead was Ali Hassan Ali, the son of the Sunni policeman killed in Baghdad. Ali had called the police station at about 2 a.m. to say U.S. troops had surrounded the house and opened fire.
"We told him that we cannot come or do anything because we have no contact with the Americans," al-Douri said. "He told us that the Americans were using loudspeakers ordering them to go out of the house, then the call was cut."
The U.S. military said the targeted insurgent leader led a bombing network in the Tigris River Valley and was suspected of involvement in suicide attacks as well as roadside bombs.
It said the people in the house refused to come out "despite nearly an hour of multiple calls and warnings that the force would engage them."
"Sadly, this incident again shows that the AQI (al Qaeda in Iraq) terrorists repeatedly risk the lives of innocent women and children to further their evil work," military spokesman Col. Jerry O'Hara said.